Shanghai has too much room to work in

In recent years, the developers of Shanghai's top-notch office blocks faced agreeable problems how to find the next good plot of land and how high to build on it. The demand for A-grade office space was insatiable as the target tenants -- multinationals -- were typically increasing headcount by around 10% a year, prompting a construction boom. Even in a buoyant market, that much building was going to increase vacancy rates and push down rents. The problem for the developers now is that all the new towers are opening their doors during the worst climate the Chinese economy has faced since liberalisation.

Rents in Shanghai's office market peaked during the second quarter of 2008 with...